Injured workers and their return to work. Beyond individual disability and economic incentives
| DOI | https://doi.org/10.1108/EBHRM-02-2015-0002 |
| Published date | 04 April 2016 |
| Date | 04 April 2016 |
| Pages | 2-29 |
| Author | Monica Galizzi,Roberto Leombruni,Lia Pacelli,Antonella Bena |
| Subject Matter | HR & organizational behaviour,Global HRM |
Injured workers and
their return to work
Beyond individual disability
and economic incentives
Monica Galizzi
Department of Economics and Center for Women and Work (CWW),
University of Massachusetts Lowell, Lowell, Massachusetts, USA
Roberto Leombruni and Lia Pacelli
Department of Economics and Statistics, University of Torino, Torino, Italy and
LABORatorio Riccardo Revelli, Centre for Employment Studies,
Moncalieri, Italy, and
Antonella Bena
Epidemiologia Piemonte, Grugliasco, Italy
Abstract
Purpose –The purpose of this paper is to study the factors affecting the return to work (RTW) of
injured workers in an institutional setting where workers’earnings are fully compensated during the
disability period.
Design/methodology/approach –The authors use a unique data set matching employer-employee
panel data with Italian workers’compensation records. The authors estimate survival models
accounting for workers’unobserved heterogeneity.
Findings –Workers with higher wage growth, higher relative wages and from firms with better
histories of stable employment, RTW sooner. More vulnerable workers –immigrants, females,
members of smaller firms –also tend to return sooner. But even when we control for such measures of
commitment, status, and job security, high-wage workers RTW sooner.
Research limitations/implications –The authors use proxies as measures of commitment and
status. The authors study blue-collar workers without finer job qualifications. The authors estimate a
reduced form model.
Practical implications –In an institutional environment where the immediate cost of workers’
compensation benefits falls largely on firms, employers seem to pressure those workers whose time off
is more costly, i.e., high-wage workers. The lack of evidence of ex post moral hazard behavior also
demands for a better understanding of the relationship between benefits and RTW.
Social implications –Workers who are induced to RTW before full recovery jeopardize their
long- term health and employability. Firms that put such pressure on employees might generate social
costs that can be particularity high in the case of high productivity workers.
Originality/value –The paper offers the first quantitative analysis of an institutional setting
where injured workers face 100 percent benefits replacement rate and have job security. This allows focus
on other workers’or employers’reasons to speed RTW. It is one of very few economics studies on
this topic in the Eu ropean context, provid ing implications for human resource managers, state regulators,
and unions.
Keywords Injury, Commitment, Relative wages, Workers’compensation, Hazard models,
Return to work
Paper type Research paper
Evidence-based HRM: a Global
Forum for Empirical Scholarship
Vol. 4 No. 1, 2016
pp. 2-29
©Emerald Group Publishing Limited
2049-3983
DOI 10.1108/EBHRM-02-2015-0002
Received 18 February 2015
Revised 10 June 2015
15 July 2015
Accepted 27 July 2015
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/2049-3983.htm
JEL Classification —J22, J28
2
EBHRM
4,1
1. Introduction
Several western countries have witnessed a decline in the total number of reported
occupational injuries over the past 20 years. This trend has also characterized the
Italian labor market. For the period 2004-2006, Italy reported a national rate of
2.9 percent compensated incidents, and a yearly average total of 850,231 notified
injuries, 68 percent of which were recognized and compensated for temporary or
permanent disabilities (EUROGIP, 2010). The debate about the outcomes of
occupational injuries has not diminished, however. This is partly because the overall
cost of occupational injuries and illnesses in western countries is still quite high.
It ranges between 2.6 and 3.8 percent of GDP among countries that are members of the
European Union (European Agency for Health and Safety at Work, 2014). For Italy, the
latest available figure for the total cost net of prevention expenses was EUR 32.1 billion,
or 2.1 percent of GDP in 2007 (Istituto Nazionale per l’Assicurazione contro gli Infortuni
sul Lavoro (INAIL), 2011). The cost of occupational injuries and illness in the USA for
the same year (2007) was estimated at $250 billion, or 1.7 percent of GDP (Leigh, 2011).
Furthermore, the debate about the compensability of occupational incidents continues
because “disability compensation is the only universal program for which entitlement
criteria are open to interpretation and for which, therefore, access can be severely
restricted. Disability compensation provides one of the principal mechanisms through
which society can regulatesocial spending”(Yelin, 1989,p. 116). Indeed, across Australia,
European countries, and North-American jurisdictions, the last two decades have been
characterized by thespread of aggressive early return programs (Seinget al.,2015),with
the effect of reducing the payment of workers’compensation benefits (Lippel, 2012).
Occupational injuries that result in time off work lead to substantial costs that are
distributed among different stakeholders depending on labor market institutions and
regulations. Countries vary greatly in the mechanisms that they use to compensate
injured workers (OECD, 2003) but, interestingly, the cost covered by workers’
compensation insurance systems often amounts to only a small percentage of the total
costs associated with all occupational incidents: less than 25 percent in the USA (Leigh,
2011) and 34 percent in Italy (INAIL, 2011). Time off work leads to additional costs
because workers face potential reduced compensation and uncovered medical
expenses, obsolescence of skills, or reduced future income, employability, and health
(Galizzi and Boden, 2003). Workers’quality of life may be compromised as well because
of physical and mental pain and suffering. Indeed, the longer the time off work, the
worse the consequences may be in terms of diminished self-esteem or increased
resentment with consequences for family life and future relationships with co-workers
or employers. Family members may also carry costs because of the need to provide care
or to supplement income, especially in the case where the injured worker was the
primary wage earner (Strunin and Boden, 2004). Employers incur costs in terms of lost
productivity, damaged equipment, damaged reputations, and adjustment costs
associated with the substituting or training of new workers. They also face
administrative and legal costs, increases in insurance premiums, as well as
accommodation costs and potential lower productivity upon return to work (RTW)
(Soklaridis et al., 2012). Insurers, health care providers, or taxpayers carry the costs
associated with the administration of the workers’compensation cases, the benefits
payments and those health care expenses that are transferred to public or private
health insurance systems.
At the same time, it is very important to recognize that workers may be subject to
pressure to speed their RTW, and that the push toward an early RTW can have very
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Injured
workers and
their return
to work
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